The Ministerial Council on Energy (MCE) has released this paper to seek stakeholders’ views on the proposed structure and content of the gas legislative package which is part of the MCE reform agenda, following on from the COAG agreement to further reform Australia’s energy market. As far as the gas market is concerned, the following matters are the most important for the reform of the gas market: improving governance of the energy markets to improve the climate for investment; improving the quality of economic regulation across energy markets; and providing for a further penetration of natural gas to achieve various objectives including the lowering of greenhouse gas emissions. The legislative framework for the gas market will comprise the National Gas Law, the National Gas Rules and statements of policy principle made by the Ministerial Council on Energy to the Australian Energy Market Commission, which is responsible for rule-making.
The following principles have been adopted with respect to developing this regulatory framework:
- Wherever feasible alignment with the new electricity regulatory regime should occur.
- The regulatory framework should be enshrined in the National Gas Law (NGL). Procedural and technical details will remain in the new Gas Rules.
- The Rule change process will be enshrined in the NGL and will be sufficiently flexible to allow the details of the Regulation to be responsive to the needs of market participants.
- General legislative principles which confer and determine the scope of functions, powers, rights and obligation should be included in the NGL.
These changes will require the current Gas Pipelines Access Law and the Gas Code to be divided up into the NGL and the National Gas Rules. Also the NGL will empower the South Australian minister to make the initial National Gas Rules. The AEMC will subsume the current roles of the National Gas Pipelines Access Commission and the Code Registrar. It will also conduct a review of the gas market at the request of either the MCE or independently. Although the NGL and the Natural Gas Rules will initially only relate to access issues to transmission and distribution pipelines, in future they will apply to, the development of a gas wholesale market and a nationally agreed distribution and regulatory framework. Further legislative amendments will cover these developments. The Australian Energy Regulator (AER) will take control of economic regulation/approval of access arrangements for gas transmission and distribution networks, and for arbitration of access disputes, instead of the ACCC. The AER will also be the enforcer of the NGL and the Rules. The decisions of the AEMC and AER will be subject to judicial review, but as with the National Electricity Law, access to merits review is a matter that is being separately investigated by the MCE. Western Australia will enact complementary legislation.
Source: Ministerial Council on Energy, Energy Market Reform Bulletin No. 48, 13 September 2005.
